Economic thoughts, theories and notes from an Economics Professor. Students in my classes can utilize this blog for the class.

Wednesday, December 13, 2006

Quiz 10 - Comparative Advantage (Part I)

Quiz 10 - Comparative Advantage (Part I) Part II is 5 questions in class, which will be given on Thurs. The final is Tues 19th

1) (5 points) Below is the maximum amount of CD's or PC's that can be built by the US and Japan.

Pre-Specialisation

UKPersonal Computers 2,000 CD Players 500

JapanPersonal Computers 4,000

CD Players 2,000

1) Who has the absolute advantage in PC's?2) Who has the absolute advantage in CD players?3) Who has the comparative advantage in PC's?4) Who has the comparative advantage in CD Players?5) Based on this, who should specialize in CD Players and who should specialize in PC's?6) Name and explain 2 objections to free trade and the counter argument provided by Economists.